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The Path to Great Startup Idea – The What and Why

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business idea, startup idea

Continuing our Startup Series, once you have decided to go on the startup journey, the next thing that follows is the startup idea that would anchor that excursion. Because this is not a vacation, it is very important you question the hypothesis of that decision making, since the idea you would pursue would determine how successful you would become, as a business founder.

The biggest mistake in the world is to see the opportunity pass by when you believe you can change a market and earn great returns for doing so. After all, most of these opportunities do not always repeat. That means if you miss them, by starting the company at the moment, you may never get the chance again.

Interestingly, unlike what some technology hubs, incubators or accelerators would tell you, the best startup ideas are not typically discovered via a formal process. In other words, you do not go to a camp with the sole purpose to graduate with a startup idea. Do not waste your money on those useless rituals – they deliver only marginal, tangential and derivative ideas. For the catalytic and sector-changing business ideas, setting up new basis of competition, look around!

Yes, since you live on this earth, and interact with businesses and people, many things do annoy you either because no one is doing them yet or those doing them are not doing them great enough. If you have the awareness, to notice the vacuum in the market, you have a startup idea before you.

Now, once you have observed the market friction which remains unfixed, the next process would be if you have the energy to pursue the mission. That energy encapsulates your capabilities in the specific domains. Yes, that you do not have electricity in Nigeria does not mean you should start an electricity generating company when it is evident you have not accumulated capabilities to do it even better than the incumbents. Simply, you have to know something in the area of business you want to run or where you have no technical capabilities, you must have the resources to hire those with the skills to help you. This brings you to order to examine problems with the capabilities you have to solve them.

Companies must develop and accumulate capabilities in order to compete in the market place. In this video, I explain how any firm can do that and why accumulating capability is very strategic. From Google to Dangote Group, when companies accumulate capabilities, they see themselves operating in the segments of markets with higher value (usually upstream) compared with where their competitors operate (usually downstream). Dangote Group can deploy massive assets and technical know-how in cement production, making it harder for new entrants and rivals.

In this video, I explain the What and Why that drive the discovery of Business Ideas. You need to combine great awareness with understanding of technological shifts to have the capacity to envision great startup ideas.

 

Why Google is Investing $550M in JD, Chinese e-commerce Powerhouse

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JD
FILE PHOTO: A logo of JD.com is seen on a helmet of a delivery man in Beijing, China June 16, 2014. Picture taken June 16, 2014. REUTERS/Jason Lee/File Photo

Google is investing $550 million in JD, a Chinese e-commerce powerhouse. With this investment, Google will reach new Asian markets where JD does business. But this investment goes beyond expanding territories to actually striving for re-positioning within the evolving dynamics of new retail. It is already evident that Amazon and Alibaba are now “search” companies where customers go straight and search for items they want to buy without going through Google first. Simply, they have disintermediated Google for shopping search, and if Google does not recognize that, it would be making a big mistake.

Google will invest $550 million in Chinese e-commerce powerhouse JD.com, part of the U.S. internet giant’s efforts to expand its presence in fast-growing Asian markets and battle rivals including Amazon.com.

The two companies described the investment as one piece of a broader partnership that will include the promotion of JD.com products on Google’s shopping service. This could help JD.com expand beyond its base in China and Southeast Asia and establish a meaningful presence in U.S. and European markets.

Yet, Google, to remain appealing to users continues to take its search users to Amazon.com, at least when they search on Google.com, as Amazon remains one of the best destinations where people can buy things online.  If Google does not do that, it means it is sacrificing its product quality over unnecessary competitive warfare, in as much as Amazon remains the best ecommerce portal in America. So, Google does deliver traffic to Amazon but Amazon customers searching right at Amazon.com have nothing to do with Google. As Amazon expands into more territories and businesses, that is expected to deepen and broaden with Google losing more “shopping search”. Without a solid ecommerce business, Google may be losing market share. (In the past, Amazon used to buy traffic from Google; my understanding is that has ended or massively curtailed.)

Furthermore, Amazon now generates a huge revenue through advertisement, at more than $2 billion per quarter. In other words, if merchants know that Amazon has the customers, typical with portals and their network effects, they are better off advertising in Amazon over Google. Google takes them to their websites when they advertise on Google. Those businesses could be small with trust factors that conversion rate may be low. But when they spend advert money on Amazon, Amazon takes them to their storefronts where active buying customers can easily purchase items with the security and trust of Amazon irrespective of their business sizes.

I was on Amazon today working on gifting items when I noticed something: Amazon now runs a serious advertising business. And there are many companies putting money in that ecosystem. If companies think that advertising on Amazon is a better deal than promoting their websites on Google, it simply means that Google has a major problem in its hands.

Facebook has walled off the partying and events communities, and if Amazon takes care of the merchandise, I do not know what will remain for Google. Yes, we put adverts for two major things: events and products. If Google becomes a second-platform for both, there is a problem for Larry Page and his lieutenants in Alphabet, the parent to Google.

For small businesses, Amazon advertisement is a better deal than spending money on Google. When you shop on Amazon, the trust factor is high despite possibly buying from a 3rd-party brand [Amazon has many protections for buyers]. Yes, Amazon takes you to a place where you spend money peacefully. Google takes you to a website where you need to do another level of risk processing before you spend money. That is why Amazon advertisement is appealing to merchants, and Google is worried.

For most merchants, Google gives page views, Amazon sends money to bank accounts. The future of the web would be fought on purses and ecommerce would be at the heart. Google through JD wants to get into that game because Amazon and Alibaba are circling.

All Together

This JD partnership will help Google to increase its share of the ecommerce domain. As noted in the partnership announcement, if JD expands in U.S. and European markets, Google would benefit. Anything JD could give Google to reduce the clear dominance of Amazon on shopping (and associated shopping search) would be a boost in U.S. and Europe. The Google shopping service is many years behind Amazon; JD could help it improve on that product and relevance in North America. And doing that could help Google to sell its physical products like Home, Pixel etc which need a solid ecommerce platform.

Leaving the market to Amazon uncontested means Google cannot be sure how some of those physical items would be sold especially now that more device sales are moving online as malls collapse across America [Google may like to reduce its presence on Amazon portal]. There is a clear convergence on ecommerce, and Google wants to be part of the game. Investing in JD would help it to fight the presence battle with Alibaba and Amazon. But it would be a long one as Amazon and Alibaba are category-kings already.

The Beginning of Starting a Startup

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Starting a startup is not a vacation journey. It is a very high intensity call that requires many sacrifices. Before you decide to embark on this journey, you need to be prepared. It is far easier to join a mature company and earn wages than risk starting something new.

But yet, if you have a top-grade skill, there is no irreversible risk. The fact is this: if you are good and run a startup and fail, there are many entities that would absorb you. In short, having started something becomes an experience and differentiator, if indeed you tried hard enough before the failure!

The biggest mistake in the world is to see the opportunity pass by when you believe you can change a market and earn great returns for doing so. After all, most of these opportunities do not always repeat. That means if you miss them, by starting the company at the moment, you may never get the chance again.

NB: Startup in this content means going to create something of value with transformational impacts in the market. It is different from small business which could be barbing salon, selling corn along the roads, etc that rarely scales. You do not build such firms without focus.

“A company five years old can still be a startup,” writes Y Combinator accelerator head Paul Graham via email. “Ten [years old] would start to be a stretch.”…

One thing we can all agree on: the key attribute of a startup is its ability to grow. As Graham explains, a startup is a company designed to scale very quickly. It is this focus on growth unconstrained by geography which differentiates startups from small businesses. A restaurant in one town is not a startup, nor is a franchise a startup.

Yes, while you can start a bank in Nigeria today, the reality is that those that started in 1990s had it easier, at least the regulations, were not matured then. The same applies to university licenses. There used to be a time when government was begging proprietors to come and pick free university licenses. Today, you need to have built a campus before government would even consider your application.

The same goes for starting a telecom operator in Nigeria. Compared with 2002, it is far tougher now as most of the profitable customers have already been absorbed by the incumbents. Now is the time for fintech but say in 10 years, it may be harder as platforms would have locked the best customers. The same analogy plays across markets and industries.

In this video, I explain the beginning phase of starting a startup by examining the existence of friction in the market and the preparations required to have a great company.


This is part of a series which I will be expanding.

30 Agro and Agtech Business Ideas for Nigeria, Africa

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agtech, agro

[Note: We’ve published exclusive mechanisms to move most of these ideas into products, and potential ways you can execute them locally. Our goal is to transition the ideas into product-opportunities in your local communities. Click here] There are many opportunities in the Nigerian (and indeed African) agriculture sector for entrepreneurs to unlock, starting from the […]

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Unemployment and Nigeria’s Poor Job Science

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unemployment

Creating sufficient jobs for the citizenry is almost a ubiquitous problem among many nations. But the scale of the challenge and the criticality varies. Nigeria’s historical inability to create sufficient jobs for its people has been a major national challenge for successive governments. From an economic and national development perspective, rising rates of unemployment can be tetra headed. Nigeria’s situation could be a matrix of tens of problems, including skill/capacity gaps, macroeconomic limitations to doing business, policy gaps, infrastructural limitations, resource negligence and un-optimized potentials.

It should have become apparent that legacy approaches – which has hitherto failed – can no longer be applied going forward. Neither can the classic Schumpeterian or Keynesian formulas work excellently for Nigeria without modifications. Emphasizing “Pro-growth” “Pro-investment” perspectives alone have not and may no longer be relevant.

In the current ambience of a political transition – this problem like many others has to be frontloaded in our national political discus. It’s inevitable that an economically promising nation like Nigeria should now build thoughtful, sustainable and comprehensive mechanisms for job creation. It can be safely said, that unemployment in Nigeria is a challenge known to all but which has albeit received less than half the attention it deserves. This problem should now receive greater and renewed attention; firstly from the government who has the onus of building the right frameworks for job creation and secondly from the private sector which owns the vehicles required to drive job growth.

Is job creation a science? Could there be country-adjusted mechanisms for reducing unemployment rates and what is Nigeria’s own job science?

If job creation is a science we have not studied it and we do not understand it either. For a major economic and national problem, pockets of mention, siloed efforts domiciled at different levels of government and unilateral efforts within organization in the private sector will not deliver the level of inclusion needed. Nigeria is due to craft a faultless job creation science that demonstrates a deep perspective on the matter and which appropriately depicts the scale of the problem.

The horizon for this problem has changed significantly; because the population boom, witnessed in the last few decades, coupled with a predominantly young demographic is helping to highlight the critical essence of a water-tight job creation policy/approach. This country’s rapid population growth will arrive with even more worrisome levels of unemployment that will deeply shake its economic and social foundations.

We are still looking at the challenge predominantly from the “welfare perspective”; which measures the hardship or economic pain/losses faced by those affected. But the more worrisome perspective is the not yet so conspicuous “social perspective” which will measure unemployment-driven, social disorders; high crime rates; psycho-social degradations; civic hazard and physical displacement.

Amidst the envious and numerous economic potentials, as well as, the politico-economic challenges that Nigeria faces, it’s evident that the ability to provide meaningful work for majority of its population will remain one of the most critical problems in the future. While Nigeria is not new to the crises of unemployment, previous – and insufficient – efforts to solve it have yielded little results.

To chat a new job creation course is therefore inevitable, but several questions arise. Can Nigeria afford to properly rethink her job creation strategies? Is the science of building economic and social systems that lower unemployment rates known to those that ought to know? Within the complicated mixture of economic interests, challenging demographics and supporting policies, where is the motor that drives job creation for Nigeria and who are the fundamental drivers?

It’s therefore exigent that conversations in the next political transition be dominated by considerations of a new way of tackling the job crises. Maybe we may debate long enough; research deep enough; and model well enough, to evolve Nigeria’s own Job science. There are peer nations that have successfully lifted hundreds of millions of poor people out of poverty in a relatively short time frame (few months or years) through novel job creation strategies. That’s a commendable but not an easily replicable feat. Crafting a unique, long term, job science for Nigeria may call for attention to less conspicuous, less conventional focal points, where interventions may be less dramatic and minimally visible, yet with great promises of significant, incremental jobs and long lasting outcomes.

Admittedly, there are many dimensions to what might become our own unique job science. In essence the saving approach may be less conventional and less classical but they should be robust, long term and impact-driven. We should explore less popular and less celebrated job creation strategies such as taming rural-urban migration, prioritizing stranded resource and commodities, nurturing uncommon businesses, inspiring new forms of competition and the poorly explored virtual export of talents.

For example, campaigns for reviving rural economies & communities in Nigeria could deliver unimaginable job benefits. Nigeria is witnessing an unhealthy rural-urban migration with many negative implications. Firstly, the hordes of people leaving rural and semi-urban communities for urban centers and big cities represent the young demographic whose exit portrays the outright death of meaningful entrepreneurship in rural communities. Directly tied to this movement is the unfortunate absence of potential rural entrepreneurial drivers and the skilled rural-workforce that escalates abandonment of resources and commodities. Migration therefore depicts a loss of people and resources that would have otherwise constituted the kernel of economic growth and job creation in those places. This scenario is one of over a hundred possible points of intervention that appears less conventional but capable of delivering gains. All options should therefore be on the table.